Silver falls below the DMA of 21, attentive to last week’s low and the DMA of $ 50 to $ 26.50

• Silver has fallen below $ 27.00 and the 21 DMA, with bears watching last week’s low and the 50 DMA at $ 26.50.
• A firmer dollar has weighed on silver prices and markets ignored the latest US inflation figures.

Silver Spot Prices (XAG / USD) They have fallen below their 21-day moving average, which is currently just above $ 27.30, and below the key psychological level $ 27.00 on the last trading day of the week and month. Precious metals are currently trading at losses of more than 2.0% or more than 60 cents on the day, having fallen from the Asia Pacific session highs above $ 27.50 to current levels of $ 26.85.

Spot prices are now 1.5% below the DMA of 21, the biggest drop below this key momentum indicator so far this month. In fact, prior to Friday’s session, the 21-day moving average had offered solid support.

But before the bears get too excited, a large area of ​​support lies to the downside in the form of last week’s loss and the 50 DMA, which both reside quite a bit at $ 26.50. Friday’s price action, for now, shows buyers on silver dips ahead of support, with silver spot prices hitting session lows at $ 26.60. A break below this level would open the door for a move back towards the monthly low below $ 26.00.

Dollar and yields

After yesterday’s huge bullish surge, US bond yields are retreating quite a bit on Friday. The decline in bond yields is most pronounced at the long end, with 30-year yields falling 10 basis points on the day to around 2.20%, while 10-year yields are down 4 basis points to return below 1.50%. However, bond yields remain considerably higher on the week (and month), and Friday’s move is more of a technical correction than anything else.

The drop in bond yields hasn’t stopped the US dollar from finding buyers; The dollar index has advanced from the low of 90.00 during Asia Pacific trading to return above 90.50. This appears to be putting pressure on the precious metals markets, which otherwise would likely have received a respite from falling yields.

Inflation and personal income and spending data for the US were the biggest data on Friday. Starting with the former, the core PCE (the Fed’s favorite inflation metric) was better than expected in January, rising to 1.5% yoy from 1.4% versus expectations that it would remain unchanged (the MoM metric was also a little better than anticipated). Meanwhile, thanks to stimulus checks of $ 600 sent in January by the US government to every adult American, personal income increased 10% month-on-month (more than the expected monthly increase of 9.5%) and personal expenses increased 2.4%.

The markets largely ignored the data; The US dollar, bond yields and precious metal markets showed little reaction, opting to take a breather after Thursday’s huge moves. However, ING warns that inflation is likely to rise further in the coming months and predicts that “inflation will move above 3.5% year-on-year before slowly declining in 2021.” While the Fed has indicated that they will analyze any “transitory” increase in inflation that is the result of base effects, ING believes that “there is a risk that it will be somewhat rigid, which to us means that the Federal Reserve is not obligated to a rate hike prior to the early 2024 they currently indicate. ”If this scenario were to materialize, it would be great for higher bond yields and not good for precious metals.

Technical Levels